Brave New Financial World

Although much of the G-20 debate has concerned issues such as global fiscal stimulus, the real high-stakes battle involves choosing a new philosophy for the international financial system and its regulation. Unless our leaders find a new approach, financial globalization cold well shift quickly into reverse, making it all the more difficult to escape the current morass.

CAMBRIDGE – A huge struggle is brewing within the G-20 over the future of the global financial system. The outcome could impact the world – and not only the esoteric world of international finance – for decades to come.

Finance shapes power, ideas, and influence. Cynics may say that nothing will happen to the fundamentals of the global financial system, but they are wrong. In all likelihood, we will see huge changes in the next few years, quite possibly in the form of an international financial regulator or treaty. Indeed, it is virtually impossible to resolve the current mess without some kind of compass pointing to where the future system lies.

The United States and Britain naturally want a system conducive to extending their hegemony. US Treasury Secretary Timothy Geithner has recently advanced the broad outlines of a more conservative financial regulatory regime. Even critics of past US profligacy must admit that the Geithner proposal contains some good ideas.

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PS OnPoint

The Mueller report in America, along with reports of interference in this week’s European Parliament election, has laid bare the lengths to which Russia will go to undermine Western democracies. But whether Westerners have fully awoken to the threat is an open question.

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